Markets & Finance

Europe Higher, Asia Mixed

February 01, 2005

European stock markets gained on Wednesday. In London, the Financial Times-Stock Exchange 100 gained 10.00 points, or 0.20%, to close at 4916.02. The FTSE ended flat, with gains by mining stocks offset by caution ahead of the US Fed decision on rates, with a 25 basis point rise announced. Wall Street traded slightly higher, supported by a strong fourth-quarter earnings report from Google late yesterday. At home, the mining sector built on yesterday's gains, with Xstrata leading the way after raising its takeover offer for WMC. Anglo American also gained 2.11% on sentiment. Conversely, Rio Tinto lost ground amid talk it may counterbid for WMC. BSkyB reported 192,000 net adds for the second quarter, well ahead of the consensus figure of 146,000, vs. 193k year-over-year, taking its total to over 7.6 million subscribers. Unilever was boosted 3.1% by a broker upgrade. Meanwhile, excitement surrounding logistics firm Exel cooled 4.35% with Citigroup issuing a note saying U.S. firm UPS is an unlikely suitor, adding that such stories can be traced back to 1999.

In Germany, the DAX gained 16.34 points, or 0.38%, to close at 4296.31. Frankfurt ended the session at intra day highs, but failed to break above the psychologically important 4300 level on an otherwise quiet day dominated by indecision ahead of the U.S. FOMC interest rate move and on-going M&A distractions. German sentiment was dampened by a surprising dip in December retail sales. Sales fell 0.3% from November, vs. an expected rise of 1.9%. Among stocks moving today, Linde continued yesterday's surge after rumours of a possible takeover by a U.S. or U.K. competitor. The gas producer also breached an important resistance level at 50 euro. Allianz gained 1.0% after Merrill Lynch raised its rating to buy from neutral. Porsche eased 1.0% after saying its U.S. January car sales dipped 1% as sales of its SUV fell 22%. VW reported sales that are lower than peers but in line with expectations.

France's CAC-40 gained 12.54 points, or 0.32%, to close at 3951.72, as advances in Vivendi, Suez, Arcelor and Total offset falls in Sanofi-Aventis, PPR and STM. Across the Atlantic, Wall Street edged higher, with Google providing support. Meanwhile, oil futures were volatile after U.S. crude inventories data for the week ending Jan. 28 showed a draw of 0.3 million barrels, vs. expectations of a build of 1.5 million barrels and gasoline inventories showed a build 1.6 million, vs. predictions of a draw of 0.3 million. Investor focus turned to the Fed's interest rate decision, with a 25 basis point hike to 2.5%. Back at home, a flurry of activity swarmed around Cap Gemini and boosted the stock by as much as 6.2% in late trading. Shares were lifted by expectations of further management change, which is hoped will bring greater efficiency to the group. Vivendi posted in line, with Music continuing along its path of recovery thanks to the success of album releases by U2 and Eminem.

Asian markets were mixed on Wednesday. Japan's Nikkei average finshed up 22.74 points, or 0.20%, to close at 11,407.14, at a two-week closing high, as strong earnings lifted major stocks such as Eisai and Mitsubishi Motor. Eisai added almost 3% after it said third-quarter profit rose 6.5% while Mitsubishi Motor surged 4.58% on a report saying automobile sales in Japan rose 2.4% year-over-year, the first gain in 14 months. Denso Corp rose 1.31% following a 5% rise in third-quarter profit while Suzuki Motor advanced 1.58% as profit jumped on robust Asian sales. Steel makers trended higher after Asahi newspaper reported Japan's large steel makers are set to request price increases of 10%-20% year-over year per tonne for steel sheet in negotiations with industrial customers. Fuji Heavy shares up 2.25% after the Nihon Keizai reported it plans to tie up with Toyota Motor in hybrid vehicle technology.

Hong Kong's Hang Seng Index slumped 22.46 points, or 0.17% to close at 13,555.80. The index was led by losses in properties, utilities and financials.

Canada's benchmark TSX/S&P gained 33.81 points, or 0.36%, to close at 9,303.94.